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1 AN ECONOMIC MIRACLE

During the Great Depression, the esteemed Yale economist Irving Fisher came to a stark realization. In the midst of this grave economic crisis he ob-served that not only were the majority of Americans su!ering as a conse-quence of poor monetary policies, but also in large part they were su!ering needlessly. In the a"ermath of Black Tuesday, October 29, 1929, millions were left unemployed and in severe financial hardship. Within three years, industrial production had dropped by almost 50%, and 5,000 banks in America alone had gone under.10

Black Tuesday may have started on Wall Street but its impact was deeply felt globally. Whole industries came to a standstill and the consequent social distress gave rise to regressive political movements around the world that capitalized on the anger, fear and confusion of the times.

By 1933, Fisher had come to understand that millions were experi-encing intensified financial pain because they did not have access to a sufficient money supply. Indeed, in retrospect, many prominent econo-mists including current Federal Reserve Chairman Ben Bernanke and economist Milton Friedman later agreed with Fisher’s on the ground observation that the Great Depression was severely exacerbated by a contracted money supply that was unduly restricted from expanding to the levels of demand. 8

In plain language, the US Federal Reserve was not printing enough money to meet the needs of the people. Their inability to increase the money supply was in large part due to regulations that bound them to backing their currency with gold and by reaching credit ceilings that

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were in place. The money supply then further contracted because of the declining confidence in the banking system. As a consequence, hoarding money became a widespread pandemic. This left people with things to sell and others with things to buy but an insufficient supply of money to effectively enable the exchanges. Therefore, more than one million Americans were reduced to the slow and difficult process of barter while tens of millions of others had insufficient and sporadic access to cash. The overall impact of hoarding was severely amplifying the financial pain throughout the country and the rest of the world.21

The Miracle of Wörgl

With this grave problem in mind, Fisher wrote the book Stamp Scrip in the midst of the Great Depression to disseminate an effective solution as quickly as possible. It was basically an instruction manual for local towns and cities to create their own temporary local currency to compensate for the contracted money supply and the inability to increase it at the Federal level.21

First, he instructed towns, municipalities and cities to issue notes (scrip) on their own, and to guarantee their value with the promise to pay it back in US currency within one year. This, he believed, would increase the confidence in the market and help ensure they could be used interchangeably with legal tender. By producing their own scrip, local municipalities could effectively act as surrogate printing presses for the Federal Reserve as they were constrained from creating new money on their own.

The ‘stamp’ in ‘stamp scrip’ was something far more novel and innovative a proposal for boosting the economy out of the Depres-sion. Fisher designed the money to have 52 boxes on their reverse side. Each week on a Wednesday, the money holder would be required to buy a stamp to validate the value of the note for the following week. In Fisher’s design, for each $1, one had to pay 2¢ to buy the weekly stamp to keep it valid (or 2% weekly). This provided the money holder with significant new incentive for using their currency before the expiry date on Wednesday. This bold and creative idea came to America from Europe where it had successfully been implemented. #e most notable of its applications came in the town of Wörgl, Austria.

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In 1932, the town of Wörgl was su!ering from a 35% unemployment rate. #e town’s mayor had a long list of projects and only 40,000 Austrian schillings in the bank to pay for them. Rather than simply spend the money on what would amount to only a fraction of the work that needed to be done, he used the schillings to back the creation of local stamp scrip. #e mayor then used the stamp scrip to begin paying for public projects and thereby introduced the currency into the town’s circulation. Yet, it was only a!er this money was spent that the dramatic e!ects began to take hold.56

In less than two years from the start of using the stamp scrip it became the $rst town in Austria to reach full employment. With the equivalent of a modest number of Austrian shillings in circulation, reports money expert Bernard Lietaer, “Water distribution was generalized throughout…the town was repaved, most houses were repaired and repainted, taxes were being paid early, and forests around the city were replanted.”56

Clearly when a town begins to experience full employment during a depression and even voluntarily deciding to pay their taxes early, people will talk. In this short period of time the success of the town had garnered international attention and was branded the ‘miracle of Wörgl.’ Even the French Prime Minister, Édouard Dalladier, came for a special visit to eval-uate the dramatic economic renaissance of a depressed community.57

!e Science behind the Miracle

While a part of this marked turnaround came from the town’s revenues in collecting stamp scrip fees, this was not the most signi$cant force be-hind the dramatic revitalization. Of greater importance were the extraor-dinary contributions from its increasingly engaged citizens. #ese citizens were enabled to transform their community and do what was previously impossible and economically unfeasible when the average velocity of mon-ey throughout the town increased fourteen fold because of the stamp scrip’s monthly expiration date.56

In other words, with the introduction of stamp scrip, money changed hands fourteen times more frequently in the same period of time than with the national currency, the Austrian shilling. #e sudden increase in trade and activity of this magnitude represents a dramatic rise in economic activity and con$dence that simply cannot be replicated by central govern-ments through spending programs or tax cuts.

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Between July 5, 1932 and November 21, 1933, an average of only 5,500 units of the stamp scrip were outstanding (its value was on par with the Austrian schilling). #ese units circulated throughout the community 415 times over 13.5 months. Each unit therefore changed hands on average approximately every single day. As a consequence only 5,500 schillings of stamp scrip in circulation produced the extraordinary equivalent of more than 2.5 million Austrian schillings in economic activity during this period (this is the equivalent of about 64 million Austrian schillings or US $7.5 million in 2001 terms). Net investment in productive assets also increased by more than 200% compared to the previous year prior to stamp scrip coming into circulation.57

Fourteen times the number of economic transactions is an extraordi-nary leap in activity by anyone’s standards. In traditional economic think-ing it is generally assumed that such an increase in the velocity of money can occur through innovative technical advances or during unfortunate times of hyperin%ation when people cannot give their money away fast enough because of its falling value.

New technologies, ranging from faster transportation, to new eco-nomic tools, to new communication devices have enabled economies to increase the velocity of economic activity and the span and breadth of their trade. When money is able to move from one transaction to another at a faster rate, economic output can grow because the speed of business in-creases. Enhanced potential for greater wealth creation, e&ciencies and societal interconnectivity also emerge.

#e general exception to this case is the occurrence of hyperin%ation, which emerges when the purchasing power of money rapidly devalues. #is phenomenon tends to occur when the money supply far exceeds demand. For example, in the Weimar Republic in 1923, hyperin%ation was so severe that prices doubled every two days. In other words by holding on to money for two days, the price of a loaf of bread would double. Holding onto it for four days, it would double again, and so on. In such dire circumstances it is in the money holder’s interest to spend the money as quickly as possible to avoid the devaluation, which can accelerate the velocity of money.

In the case of Wörgl, the town certainly did not experience the negative e!ects of hyperin%ation when the velocity of money and economic activity skyrocketed. At $rst glance, one might hardly think that placing an expiry

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date on money would constitute a techno-economic advance. Neverthe-less, the town succeeded in transforming massive unemployment and stag-nation into full employment and community revitalization during the Great Depression. All of this came directly as a consequence of implementing stamp scrip. #is achievement truly was a miracle, yet backed by the innovation of solid, grounded economic means.

#e primary source of renewal and revitalization did not come from the town’s spending on public projects but from the creative enterprises and projects taken on by its citizens. Rather than rely on municipal govern-ments or centralized powers, the people of Wörgl had created the means to take power into their own hands and directly get things done without the meddling of relatively arbitrary and ine&cient centralized bureaucracies.

The Origins of Stamp Scrip

Credit for the innovation of stamp scrip belongs to German en-trepreneur and economist Silvio Gesell. In his opus, The Natural Eco-nomic Order Gesell introduced the concept of demurragei as an eco-nomic tool to effectively solve the problems of hoarding, interest and inflation.26 It was his original thinking that served as the basis for the successful stamp scrip currencies in Germany, Austria and America during the Great Depression. His work garnered notable recognition and approval from many of his contemporaries, including some of the most acclaimed economists of the 20th Century, including John May-nard Keynesii, and as we have already seen, Irving Fisher.

The term ‘demurrage’ is borrowed from the shipping industry. It is a charge designed to keep vessels moving efficiently and on time.In practical terms, it is a fee applied by ship owners to penalize vessel

! Demurrage is a French word that I shall herein call a ‘circulation charge.’ This references Margrit Kennedy’s term ‘circulation fee.’ ‘Charge’ has herein been deemed more appropriate due to its connotations as a catalyst (‘re-charge’ means to refresh and revitalize). It also supports organic and energy metaphors, such as increasing the velocity and power of money’s current as it flows throughout society; it also increases the connectivity of economic actors. ii In his General "eory of Employment, Interest and Money (1936), Keynes ob-served “#e idea behind Gesell’s stamped money is sound.” (p.357)

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charterers for delays in their allotted time for loading, transporting and removing cargo. It serves the function of ensuring that current charterers deliver on schedule so that the next charterer has access to their vessels on schedule, and so on. It therefore protects shippers and ship owners alike from incurring lost revenue due to delays no fault of their own. Thus, as a result of demurrage, the whole shipping system becomes far more stable, predictable and efficient.

Gesell realized this same process could be applied to money with the potential to generate far greater resilience and equity in the eco-nomic system. As an entrepreneur he fully understood the value of free markets and trade, but demonstrated with remarkable clarity that there was a world of difference between the systemic operating prin-ciples of a market economy that uses demurrage and one that does not. The successful implementation of his ideas confirmed their theo-retical soundness and brought on acclaim by many noted economists and thinkers of his time.

Creative Capitalism

#e dramatic recovery and expanded economic opportunities that the town of Wörgl experienced in less than two short years echoes the kind of change Bill Gates called for when he pointed out the need for a more Creative Capitalism. #e shi" from 35% unemployment to full employ-ment within 13 months is virtually impossible within the framework of our current economic system. #is is precisely the kind of qualitative change we need in our global economy to help reverse problems like unemploy-ment, poverty, inequality, disenfranchisement, and broken governments that have accumulated enormous national debts for future generations to inherit despite the fact these same problems have continued to worsen on several fronts. Says Gates:

Capitalism has improved the lives of billions of peo-ple—something that’s easy to forget at a time of great economic uncertainty. But it has left out billions more. They have great needs, but they can’t express those needs in ways that matter to markets. So they are stuck

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in poverty, suffer from preventable diseases and nev-er have a chance to make the most of their lives…we need a more creative capitalism: an attempt to stretch the reach of market forces so that more companies can benefit from doing work that makes more people bet-ter off. We need new ways to bring far more people into the system—capitalism—that has done so much good in the world.25

Increasing the velocity of money via innovation is one of the best ways to enhance economic activity and prosperity—the prerequisites for a more creative capitalism. If the world were able to achieve anything remotely close to what was achieved in Wörgl, it would be a markedly di!erent place —and clearly for the better. Factoring in the emergence of digital tech-nologies and the increasing speed of business in the age of the internet, along with the increasing ability of like-minded social entrepreneurs to connect and organize online, an economy that could capitalize on digital technologies and e!ectively reproduce the results of full employment and the restoration of a town within two years during the Great Depression is a tremendous signal of hope in uncertain times.

So what happened? Why isn’t it already in use around the world today? Wherever it was properly implemented, it succeeded.56 Why didn’t it catch on?

A Challenge to Central Authority

For better or worse, it would appear that the success of the stamp scrip and the subsequent emergence of decentralized power structures and eco-nomic activity have been broadly interpreted as a threat to the power and control of national governments and their central banks.

By the time the German stamp scrip “Wara” had successfully spread throughout Germany in 1931, it had attracted the attention of the Ger-man Central Bank. Subsequently it was prohibited from further operations because of the Central Bank’s monopoly on currency creation. #e process was similar in Austria. When 200 communities launched projects to copy Wörgl’s success, they were also blocked by the Austrian Central Bank. In

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1934 a"er the town’s stamp scrip was banned Wörgl quickly fell from full employment back into a painful rate of 30% unemployment. 57

In the United States, Irving Fisher and his colleagues helped intro-duce the stamp scrip idea into 400 cities and thousands of smaller com-munities. To adopt even broader implementation Fisher brought the stamp scrip concept to the attention of the US Treasury Department. According to Lietaer, Dean Acheson, the Undersecretary of the Treasury at the time met with Fisher and subsequently sought out other expert opinions on whether stamp scrip would work. Lietaer relates that Acheson was advised, “…it would work but that it would imply strongly decentralized decision making, which he should check out with the President.” 56 Soon therea"er, President Roosevelt prohibited any use of “emergency currency” and an-nounced one of the most ambitious and controversial series of centralized government projects in American history: the New Deal.

New Deal, Part II?

Between the beginning of September and the end of October, 2008 global markets lost a staggering $16 trillion in market value.82 #ese shock-ing losses dramatically impacted the US Presidential elections and made Barack Obama the historic choice for 44th President of the United States. Shortly a"er his election, the President’s team suggested they wanted to create a stimulus package that would deliver a “jolt” to the $nancial crisis and “startle this thing into submission.”98

#ese comments have led many to believe the incoming Administra-tion is seeking to implement a new New Deal. While the intention is surely noble, there is little historical evidence to suggest that big government can spend its way out of a crisis e!ectively. #e only thing it is absolutely cer-tain to do is dig the country further into debt. Not many are aware that America’s biggest industrial collapse actually occurred $ve years a!er the New Deal began even though government spending and controls had in-creased markedly in response to the Depression. One of the main prob-lems in this bailout process is that centralized governments consistently act from a limited and arbitrary perspective that makes it very di&cult for markets to reasonably understand or predict. Says Russell Roberts:

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By acting without rhyme or reason, politicians have de-stroyed the rules of the game. #ere is no reason to invest, no reason to take risk, no reason to be prudent, no reason to look for buyers if your $rm is failing. Everything is up in the air and as a result, the only prudent policy is to wait and see what the government will do next. #e frenetic e!orts of FDR had the same impact: Net investment was negative through much of the 1930s.72

#ere is another signi$cant problem. #is isn’t 1933. Today’s America is facing far more complex challenges at home and abroad. It has accu-mulated more than a $10 trillion debt (about $40K per US citizen) and an increasing dependency on foreign powers to $nance government spending and de$cits.

#e US Government Accountability O&ce (GAO) projects that the costs to maintain Medicare and Social Security programs at current levels will alone surpass all tax revenues by $40 Trillion over the next 75 years. Both the GAO and Treasury Department have deemed these $scal expenditures

Figure 1: United States Federal Debt

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simply “unsustainable.” Consider the projected escalation of the US Federal Debt per cent to GDP without signi$cant entitlement reforms in Figure 1. Keep in mind that these projections were made prior to the deepening of the recession, which will likely lead to tax revenues much lower than projected.

Incredibly, despite these dire projections many interests continue to lobby for even greater healthcare bene$ts and spending in the midst of this economic crisis. But where will the money come from and who will ultimately pay for it in the long run? How long can this go on without ex-periencing a severe moment of reckoning?

According to Kent Conrad, the chairman of the Senate Budget com-mittee, the moment of reckoning may not take long. He warned that by running de$cits perpetually at such magnitude could lead to a permanent American economic decline:

President Obama is walking into a $scal disaster of stun-ning proportion, coupled with an economic downturn of unknown duration and depth. Our nation is building a wall of debt that is certainly sobering and I think should give us all pause. My own economic and budget team projects that, unless we take decisive action, even a"er our economy pulls out of its slide, trillion-dollar de$cits will be a reality for years to come.69

#e country of course is also currently engaged in two very costly wars and faces other dire threats ranging from terrorism to cyber warfare to a destabilizing global geopolitical order. Furthermore, while the economic power of the United States has been extraordinary since World War II it too appears increasingly di&cult to sustain moving forward. In global terms, it is expected that relative wealth will increasingly %ow from the West to the East, while a number of countries will continue to challenge American power in global a!airs.28

#e continued emergence of a multi-polar world order therefore pres-ents itself as an opportunity if not necessity to create more stable and co-operative global relationships, institutions and structures. #e failure to do so means countries such as China or Russia may well assume Amer-ica’s current position of economic power and leadership yet potentially

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demonstrate far less interest in actualizing global values and responses to global problems.

A Second Chance

#e bottom line is that the world order is in %ux and likely transition-ing from a unipolar world of American dominance toward a more unpre-dictable and unstable multi-polar world with several countries competing for power, resources and in%uence.28 A collective collaboration of the world’s most powerful and in#uential nations in economic a$airs therefore presents itself as the most e$ective means to ensure that all parties are included in eco-nomic and geopolitical processes while securing each from the arbitrary and excessive in#uence and power of a single nation over the whole.

Anyone who has ever even cursorily followed dialogues at the UN Se-curity Council will be well aware that such collaboration is easier said than done. #e key question therefore becomes ‘How do we create the global market conditions and rule-sets to best align national interests and stimulate favorable propensities for successfully managing this critical transition period into a multi-polar world fraught with threats ranging from weapons of mass destruction to %nancial crisis to terrorism to culture wars to global pandem-ics to the burden of escalating national debts?’

#is brings us back to stamp scrip. If it can reverse a 35% unemploy-ment rate and help achieve full employment and community renewal with-in the span of two years for a small town, during a depression, could it be applied on a much broader, international scale? Could it do for the global economy what it did for Wörgl?

#e conclusion, we shall make here, is ‘yes it can.’ It does not mean it is a foregone conclusion, however. In fact unless our way of understand-ing goes deeper than in the days of Irving Fisher and FDR, it is likely to remain peripheral and unknown to the majority of engaged citizens, while rejected by centralized governments. In the context of our current $nancial crisis and the lessons from the Great Depression, this moment in time af-fords us a second chance to reevaluate our assumptions about money and the nature of the universe based on new understandings in epistemology and quantum interconnectedness. #is emerging way of seeing the world allows us to take a fresh new look at stamp scrip as an instructive path to-wards creating new currency for the 21st century global economy.

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Towards New Currency

#e opportunity to reevaluate stamp scrip as a market innovation for the new global $nancial architecture brings us to a critical point about new currency. Currency is not only about money that is in circulation within a society, it is also about acceptance, meaning and shared common values. It is one thing if it worked in a small town in Austria several decades ago. But without truly grasping its meaning and value in a shared global context, why on Earth would diverse peoples even think about changing the way they use money now?

In the following chapters, we shall look at money not only as an ob-jective phenomenon but also as a subjective one. We will look at how the world has changed since FDR’s decision in 1933 to forbid stamp scrip, and shall see why today’s world is far better positioned to capitalize on its pow-er and transformative potential. We will also consider it through the lens of epistemology and systems theory to see how money is far more than a thing out there in the world. In seeing money as an extension of how we know the world, we can consciously design it to re%ect the global values that are emerging in response to global problems and challenges of unprec-edented complexity.

In the words of former US National Intelligence Council Chairman Robert Hutchings, “#e world is on the cusp of the most profound shi" in global power and in%uence in a century. Managing this quiet revolution calls for nothing short of a new international system, with a radical revi-sion of existing institutions and patterns of doing business. It is a time for thinking big.”43 Yes, indeed. Yet, if the current $nancial crisis has taught us anything it is that the average person on Main Street can no longer a!ord to leave these issues solely up to the so-called experts, almost all of whom failed to see these problems coming. Money and the global economic sys-tem must become central and broadly understood issues for all concerned citizens around the globe. It is a time for all of us to start thinking big.

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7THE CONSCIOUS ECONOMY

In Chapter Six we explored the potential for a circulation charge to resolve unsustainable systemic problems that are increasingly leading to the incompatibility with human values and life conditions on planet Earth. We also saw that a policy of zero interest and therefore zero exponential economic growth could be practically achieved with the circulation charge.

Here we shall explore a deeper understanding of the circulation charge and why it is not only an important systemic leverage point but also serves as a gateway for seeing the world in a whole new way. We shall also further demonstrate that money is not only a thing, but also a tool deeply connected to the human psyche. As we change our relationship with money we also have an opportunity to consciously break through the hall of mirrors that has left humanity in a state of confusion, contention and separation from nature itself.

Money Must Rust

Shortly after Gesell published The Natural Economic Order, Rudolf Steiner endorsed his idea of demurrage in his Lectures on the Global Economy with three simple words: money must rust.88 Steiner was sim-ply echoing Gesell’s insight that money must, like all things, mimic the properties of nature if it is to function properly. Gesell pointed out that money has not been consciously created with one of the most important qualities of all living things: death and decay.

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Therefore, without this process of physical impermanence in-tegrated into its design, money is destined to remain a mechanistic tool and disconnected from reality. It also explains the lifeless qual-ity of money at present, as exemplified by hoarding, inelasticity and inflation. Whereas all goods and resources in the economy need to be stored, preserved, and sold before they rust, decay or become obsolete, money currently has no such quality explicitly built into its design.

Money, therefore, presently lacks a natural quality common to all other things in the economy. Because it lacks a natural design, it suffers a multitude of unconscious economic problems, including inflation, unemployment, boom and bust cycles, hoarding and market bubbles. It is perhaps less surprising that this key design element has been overlooked given that our current monetary system was born from within the mechanical, Newtonian paradigm.

Money’s primary function is to serve as a medium of exchange. It evolved out of barter as a means to make trade more efficient by replacing something in the exchange process. Gesell and Steiner (with Fisher and Keynes’ explicit endorsement) proposed that money there-fore should mirror the properties of living things as precisely as pos-sible, including their perishable nature.

Money also acts as a commodity for storing wealth. Here too, Ge-sell argued that money should represent the properties and charac-teristics of other commodities as accurately as possible. With such an approach, money becomes aligned with the properties and character-istics of the living natural world:

Only money that goes out of date like a newspaper, rots like potatoes, rusts like iron, evaporates like ether, is capable of standing the test as an instrument for the exchange of po-tatoes, newspapers, iron and ether. For such money is not preferred to goods either by the purchaser or the seller. We then part with our goods for money only because we need the money as a means of exchange, not because we expect an advantage from possession of the money.

So we must make money worse as a commodity if we wish to make it better as a medium of exchange.26

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By ‘making money rust’ then, society integrates what had previ-ously been denied and unconscious within the economic paradigm: death and decay. In reality, all that changes is how we perceive and hold money based on a deeper understanding of these processes. When money is treated like everything else, individuals are removed from the ability to seek arbitrary and destructive gains over the whole.

When we hold money in a conscious context that aims to reflect the properties of the living planet, it becomes aligned with the proper-ties and characteristics of other things in the natural world. This pro-found theoretical breakthrough by Gesell was later proven in practice in Wörgl and hundreds of other towns in Europe and America.

Seeing money in this light, it is clearly a product of human inven-tion and creativity that is always malleable and subject to the evolu-tion of human perception, values and life conditions. Money doesn’t grow on trees; it is born in our minds. It is our collective agreement in its value and worth that lend it currency. This is how it also carries a third function of grounding cultural values and meaning into society and its social structures based on how we hold it.

Certainly one might imagine that money, being the primary unit of economic exchange, would have to serve the function of accurately representing the goods it replaces in the exchange process for eco-nomics to be legitimately considered a well-grounded scientific and objective discipline. But, not surprisingly given the above, if we exam-ine it closely, we will find that this is not so.

As a projection of human consciousness, if money is not designed with an organic nature that is inherent to all things in the world, it means that we as a collective species do not consciously see ourselves as an organic body and integrated part of the whole ecosystem. Our money simply must therefore reflect our disconnected or dissociated beliefs—our idealized self images—rather than the living and whole properties of nature. Let us recall that this is precisely how we defined the narcissistic inflation of idealized image over the living self-image of the body.

In short, money today represents the projection of idealized self-images of human cultures as a denial of death. Money with the circula-tion charge represents the projection of the living body and planet by those same cultures as a conscious acceptance of death.

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Money and the Second Law of Thermodynamics

Let’s consider commodities: wheat, gold, oil, soy, steel, salt, sugar, diamonds, and paper. All of these goods have a common property: if they are not on the market, they must be stored. Failure to store these commodities safely will result in theft, decay, rust and so on. The pri-mary force at play here is what scientists refer to as the Second Law of Thermodynamics.

According to Eric Beinhocker in the The Origin of Wealth, “Every organism needs a source of energy to maintain and grow its complex internal order, and all life gives off heat and waste materials as entropy is paid back to the universe. When that process stops, the organism’s molecules are returned to the disorder of the environment—death is a surrender to the Second Law.” Beinhocker also notes that the Second Law of Thermodynamics is remarkably absent from modern econom-ic theory. This leads him to call the field “half-baked.”6

The Second Law of Thermodynamics is a natural process common to all things. It requires significant expenditures in energy to over-come, which in economic activity leads to incurring significant costs like warehousing inventory and transportation. These costs increase the compulsion for the holder of goods to sell as quickly as possible to minimize costs. When one brings goods to market there is incentive to sell immediately to avoid incurring future storage and transportation expenses that of course are necessary to protect goods from the Second Law. The holder of money on the other hand has no such concern.

Thus, it might be said that from the position of the individual money holder, our money is unconsciously designed to defy the Sec-ond Law rather than represent it with accuracy (we will consider this in the context of the cultural phenomena of narcissism in more detail below). This process is an arbitrary convenience to the money holder that has emerged at the expense of society as a whole.61

Here we can also begin to see the imbalance or disequilibrium in exchanges between the seller and buyer (money holder). One may want to sell their bushels of wheat for $1,000 as soon as possible, but what is a buyer’s incentive to act right away? Given there is only a holding cost on one side of exchanges and markets, those with money

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can afford to wait out transactions to gain an advantage over the seller because the seller has compulsions to divest of their product as quick-ly as possible (for cash flow, avoiding warehousing and products go-ing bad, etc). The buyer is able to let the interest accumulate on their money while those who sell will have a tendency to lower prices in order to liquidate stock and minimize further storage costs. Certainly, this situation confers advantages to the buyer to delay their decision as long as possible and, on the whole, is bound to significantly impact the price of goods and the overall efficiency of economic trade pat-terns.

If money were some sort of natural phenomenon comparable to fig trees or the formation of rain clouds, we might say well, so what? That’s how it is. Clearly, however, this is not how money works. As a human creation, how we hold money is determined by the interior val-ues and worldviews we collectively project onto it. Our present form of money and the foundation of traditional economic theory existed long before the Second Law of Thermodynamics was even accepted by the scientific community. Indeed, in the value system from which our money was invented, material wealth creation and social status were far more important than emerging values like sustainability, equality, social entrepreneurship or global integration. Thus, it can be no sur-prise that money does not reflect many modern scientific insights or emerging contemporary global values.

Even when we regard money through the lens of the current ma-terialistic scientific paradigm, it fails the function of accurately mir-roring the natural organic properties of the goods and commodities it represents. There is nothing objective about it in this regard and this, in turn, makes it worse as a medium of exchange. Therefore, we can understand our present utilization of money to be somewhat un-conscious, unscientific and a source of arbitrary power in free market exchanges. This arbitrary power is the ability to withhold money from the marketplace to gain advantage over sellers, suppliers and borrow-ers.

Let us now consider a more objective, scientific approach that could enable a money design to accurately reflect the organic nature of life and integrate the Second Law of Thermodynamics into the system:

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!"# Determine a basket of commodities that reflect their re-spective usage in the global economy: x bushels of wheat, y barrels of oil and so on. Then determine the average stor-age costs for this global basket of goods needed to maintain them. Say, for example, we find that the average storage costs of this global basket are 5% per annum. We could then apply a 5% storage fee per annum for withholding money from the marketplace: the circulation charge (Margit Kennedy ob-served that 5% is also the average historical interest rate48).

$"# This, in turn, could create level footing for exchanges as both money holders and suppliers of goods have on the whole an equal compulsion to meet in the marketplace. As a result, the playing field could level, velocity of exchanges and liquidity could increase dramatically and, in the long run, most of the money supply could enter into active circulation.

%"# As we discussed above, the increasing velocity and circula-tion of money would make it exponentially easier to man-age money supply than it is today. Today, downturns in the economy lead to a propensity for increasingly withholding money from the system, which worsen the problems. In this new case, money supply could almost always be in constant circulation and, therefore, it becomes exponentially more elastic. This would lead to unprecedented economic resil-iency from exogenous shocks and the natural ebbs and flows in demand that currently pose great risks to the global eco-nomic system—and, therefore, the whole world.

&"# Because of the 5% charge for idleness, money in the future will take on equal value to the present. In fact it will enable time-neutrality on money: it will be equally valuable today as two years or even one hundred years into the future. This neutrality emerges because of the new systemic propensity for dissolving the need to charge interest in lending, com-bined with the elimination of inflation due to the compul-sive need to expand the money supply.48

As we have seen, this shift in the future value of money would create a profound change in economic activity and radically enhance

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the favorability of financing long term projects that receive revenue several years or even decades into the future. At present, those future earnings are radically discounted in favor of having money now. In other words, this shift in the long term, future value of money will revolutionize the feasibility of large-scale projects to an extraordinary degree.

The implementation of a systemic reward for long term, holistic thinking combined with the potential mitigation of compulsive expo-nential growth could encourage the resurgence of quality and prod-ucts built to last. It is from within such a context that radical new resource efficiencies could be achieved. It could even lead to a market based economy where planned obsolescence became inconceivable and utterly irrational given the planet’s increasingly precious and vul-nerable resources and the common sense benefit to society of produc-ing high quality products over poorly made products that rely on style and hype over substance.

Reinventing Growth

To gain a clearer perspective on the incompatibility of exponential economic growth patterns with the planet, consider this chart cre-ated by Helmut Creutz to contrast three different patterns for growth (Figure 3). Line A represents an organic or natural curve of the pat-tern of growth found within the ecosphere, amongst living organisms. In natural growth patterns we generally find a quick, initial burst of growth followed by a leveling to almost zero growth.

Such patterns reflect the growth process of trees or human bod-ies. Early years of physical development are remarkably active, fol-lowed by an extended period of little to no growth at all. In normal circumstances, the human body has almost entirely completed physi-cal growth by the time they reach 20 years of age.48

The organic growth pattern helps explain why in practice Wörgl and Fisher’s projects in America both applied rates that were higher than 5%. Perhaps, in a depressed economy the initial circulation charge to stimulate and accelerate the velocity of money must be greater in order break out of the old patterns. In the long run, however, we might safely predict that as the economy integrates the new currency, the

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Figure 3: Organic vs. Exponential Growth Patterns (Helmet Creutz in Kennedy).

circulation charge at rates approximate to the average cost for storing goods on the whole will suffice to stimulate lending at zero interest.

It is at this point where we might expect to see the emergence of newfound capacities to combat the problems of resource depletion and planned obsolescence. For, as growth and the velocity of money begin to stabilize for the long term and as interest rates begin to dissolve, the compulsion to grow exponentially will also dissolve. This means that increasingly the current pressure for growth and profit combined with the discounted future would be positioned to shift towards integrated values such as long-term thinking, resource efficiency and stable mar-kets.

Exponential growth patterns (Curve C) are generally marked by slow growth at early stages, followed by an increasing acceleration over time. Kennedy points out that this is the pattern exhibited by cancer-ous cells in the human body as they eventually overrun the body’s ca-pacity to sustain their exponential growth. As we have discussed, due

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to compound interest, economic growth at present is programmed to follow this same pattern of exponential growth over time.

While the success of this current economic paradigm has been remarkable, particularly with respect to wealth creation and technical innovation, the more we truly become an interconnected global sys-tem, the more we are now beginning to recognize that this growth pat-tern also carries significant intrinsic problems that are irreconcilable within this system. It places massive pressure on the world by asking the ecosphere and the human body and mind to sustain exponential growth within a world of natural growth patterns.

This discrepancy in growth patterns shows us with lucid clarity that the current economic paradigm itself is unsustainable and un-tenable despite our best intentions or most enlightened attempts to mitigate its impact on the environment. This is a critical point that heads of State, corporate executives, religious leaders, artists, vision-aries, academics, environmental leaders, Cultural Creatives, students and social entrepreneurs must quickly awaken to. No one who is seri-ous about global change can afford to ignore the impacts of money, interest rates and exponential growth in the context of our prospects for building a conscious economy. This is the essential work ahead of us should we wish to ensure planetary integration and survival.

By eliminating the compulsion for exponential growth in the material realm, a circulation charge enables us to reinvent our un-derstanding of economic activity in organic and holistic terms. Even more importantly, however, is the emerging capacity to design a global economy and social system aligned with serving the evolution of con-sciousness.

We might say, therefore, that the conscious economy could make exponential growth redundant on the physical plane—where it is in-deed increasingly appearing like an illness and grave threat to the planet—towards fostering exponential growth on the psychological plane where logarithmic growth is indeed a natural characteristic of the evolution of consciousness.37

Within this emerging paradigm fostering the evolution of con-sciousness itself rather than perpetuating endless material growth for its own sake, can become a natural pragmatically realizable objective.

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Indeed, the more we consciously align every aspect of our society towards fostering the evolution of human consciousness, the better chance humanity has to survive and thrive during the 21st century.

Healing Narcissism

Earlier, we saw that economic theory has hitherto failed to inte-grate the Second Law of Thermodynamics into its paradigm. We saw that human societies have not yet consciously integrated the natural properties of living systems into money design. This discrepancy in the qualities between the properties of living things and money results in the increasingly unsustainable exponential physical growth in a world of finite resources. We compared the financial crisis to a cardiac arrest and we can certainly also diagnose this problem of exponential growth and resource exhaustion as another life threatening social ill-ness similar to cancer in the individual.

We have seen that the mechanical nature of our global economy and its constant compulsion for expansion is a consequence of the col-lective narcissism on this planet. Money’s inflation into a tool separate from, and given more value than, other things and even the whole ecosystem (our planetary body) is a direct consequence of humanity’s collective narcissistic condition. It is the process of inflating our indi-vidual and collective idealized images above our healthy self-images and the living body, in both the human and planetary aspects.

This inflationary process is precisely what the circulation charge addresses and has the potential to cure. Thus, it is not only an eco-nomic tool to enhance the performance of the economy by making it more resilient and creative it is also a psychological tool to consciously integrate the acceptance of physical impermanence and death into the core systemic designs of global society.

The acceptance of physical impermanence is indeed largely denied in today’s consumerist, anti-aging, popular culture. Yet as we become aware of this process, we are also becoming increasingly capable of introducing a new currency capable of grounding and generating new systemic propensities and morphic fields within the global system. This is how a new context rises to solve the problems and challenges

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that emerge out of an old one. Humility is needed to accept that soci-ety has evolved, for the most part unconsciously, to avoid the aware-ness of interconnectivity, wholeness, and organic natural processes.

But why on Earth do humans avoid wholeness? Perhaps it has been too painful or difficult to accept our foibles and errors and they are consequently repressed and denied. If we cannot accept ourselves as whole with all of our imperfections and limitations, the experience of wholeness is impossible.

Indeed, a culture that sets up defenses to remain unconscious of the fear of physical death or impermanence is simultaneously building its own defenses against wholeness. Why? Physical impermanence is a natural part of all of life, including the human body. Humility is sorely needed to restore our sense of connectedness to the Earth and all of life, including physical death. The very origins of the word ‘humility’ stem from ‘humus’ the origins of which means ‘of the Earth’ or ‘on the ground.’

Until we are accepting of our own physical impermanence as in-dividuals and collectives, we will be unable to experience ourselves as an integrated part of the whole of life. Instead, we will continue to mask our fear of death via the internal process of denial and inflation. We will be trapped in Flatland processes such as materialism, exces-sive consumerism and exponential growth patterns. This process is bound to keep us locked into idealized self-images and dissociated from nature.

A new currency that carries a circulation charge, therefore, can be understood as a catalyst to break through into a whole new world of reality. It must be recognized as a new process that could enable the creation of an integrative global economic system and new cultural meaning that facilitates the emergence of large-scale initiatives dedi-cated to building an equitable and increasingly intimate and unified global society. This is the kind of dramatic change that is needed to create an economy capable of addressing global problems and healing our cultural narcissism in order to reconnect to nature’s life processes.

When we accept physical impermanence collectively as a global society and species at a time of grave danger to our survival, tremen-dous new energies and meaning will be unleashed as a consequence of

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letting go of the enormous resistance the ego places on the denial of, and defense against, death and dying. We will stand poised to see that humanity has always been evolving towards greater integration and wholeness and we are now on the verge of building a global society dedicated to the service of life itself. This emerging understanding is a vital piece of the solution to what Einstein understood as the mo-mentous task facing humanityi:

A human being is part of the whole called by us universe, a part limited in time and space. He experiences himself, his thoughts and feelings as something separated from the rest, a kind of optical delusion of his consciousness. #is delusion is a kind of prison for us, restricting us to our personal desires and to a!ection for a few persons nearest to us. Our task must be to free ourselves from this prison by widening our circle of compassion to embrace all living creatures and the whole of nature in its beauty.20

For the first time in history, we can also begin to imagine this process not merely as a dream to be relegated to Utopias or fairy tales. Humanity is now collectively going beyond the daydreams of wishful thinking into understanding the means and common context necessary to embody this understanding in everyday life.

Humanity’s path must increasingly move towards serving life and its properties of organic material growth while shifting emphasis to-wards exponential leaps in consciousness. By shifting economic ori-entation from exponential material growth toward material growth in the service of psychological growth and the evolution of conscious-ness, diverse human societies could consequently become increasingly concerned with building commonalities rather than accentuating the narcissism of trivial differences.

i While there is ample material (such as the above) to conclude that Einstein was well aware of the complex challenges facing Mankind, there is very little by way of evidence to lead one to believe he had a $rm grasp of the economic conditions or grounded means that would enable the realization of wholeness and “widening our circle of compassion.”

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With conscious planetary integration replacing compulsions to perpetuate limited national and ethnic identities as overarching con-cerns, global society might develop an emphasis to ensure that every-one has an opportunity to be who and what they are without infring-ing on others’ ability to do the same. This stands in marked contrast to the current impulses in political discourse that generally validate only one value system, attack others and sometimes even deny the valid-ity of any reality at all. Paradoxically, the more we are able to build a healthy global society, the more distinct cultures, values and societies will have greater space to be different and enable more diverse expres-sions of human nature.

In this process of introducing a new currency, a circulation charge can remove the compulsion for the arbitrary use of interest rates into the system in favor of a system designed to reflect the natural proper-ties and patterns of life itself. In other words, the circulation charge enables money usage and the economy to shift from a mechanistic to an organic context and process.

In a global context—and today it must be global to have a mean-ingful impact—there are many unpredictable and unforeseeable fac-tors on the horizon. At the end of the day, therefore, the successful implementation of new currency is largely dependent upon the inten-tion to creating adaptive responses to emerging life conditions and challenges. Thus a collective willingness to make it work is wholly necessary: it cannot simply be instituted or legislated—it must also connect to our common values. For, the more we look at it, the more we will see it is the harbinger and leverage point for a new level of social development.

The Quality of Living

Individuals with a firm grasp of the workings of economics and finance may do well to point out that inflation in a sense acts like a kind of decay on the value of money, because it erodes its purchasing power over time. Thus, one could argue that money through inflation is subject to the Second Law just like everything else. This is, indeed, a sound observation that warrants further consideration.38 For, the

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more we penetrate the difference between inflation and a circulation charge, the more we will see that what sets them apart is not only an important quantitative distinction but also a vital qualitative one.

In economics, in%ation is generally de$ned as the rise in the general level of prices of goods and services over time. #e rise in prices is also re-garded as a decline in the real value of money. #us, when the general price level rises, each unit of currency buys relatively less goods and services. As we have discussed in Chapter Six, this process of the relative decline in pur-chasing power leads to adverse e!ects on the economy as a whole. Expecta-tions about future in%ation can discourage investment and saving. It can undermine the real salaries of employees and increase the cost of living. It can also lead to the shortages of goods because consumers may hoard them in anticipation of their increased prices in the future.

In%ation emerges as a consequence of the relative inelasticity of money and the poor overall correlation between the money supply and demand for goods. “In%ation,” observed Milton Friedman “is always and every-where a monetary phenomenon.” Economists and policy makers generally favor a low in%ation rate to help ensure the continued investment in capital and also help maintain relative real wages. #is process is generally man-aged by the authorities in national central banks. In practice, however, it is o"en very di&cult if not impossible to achieve desired results.

We saw in Chapter Six that a circulation charge helps solve the problem of inflation, because it increases the manageability of the monetary supply by increasing its elasticity (the responsiveness to changes in supply and demand) and the ability to make supply equal demand through the process of discouraging hoarding. The circula-tion charge simultaneously adds greater incentive to lend money that, in turn, has the potential to make interest on lending redundant. These factors together make it possible to maintain a policy of neutral or constant purchasing power over time that is both inflation free and highly rewarding for long term investment and savings as it generates unprecedented stability and predictability in market behavior. It also reverses the discounted cash flow towards a neutral cash flow over time (it becomes both theoretically and practically possible for $100 today to equal $100 in 10 years).

In this light the quantitative benefits to the whole economy become evident. The qualitative benefits, too, are such that companies can en-

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joy broader and more integrative consideration of long term, holistic forces rather than the short term, myopic thinking that emerges out of the discounted cash flow, interest and inflationary forces. Employ-ees enjoy the predictability of constant real wages, increased incen-tive to save and a dramatic reduction in the cost of living through the redundancy of compound interest. For example, with compound interest at 7% the montly cost of a $100,000 mortgage or student loan over 25 years is $700.42. These payments would shrink dramatically to $333.33 per month without interest.

This extraordinary reconfiguration of the cost of living could have enormous benefits not only on students and home buyers, but also home owners, universities, car manufacturers, solar panel producers and other capital intensive industries as the relative affordability and value of their products would leap enormously and increase demand for their goods and services. While lenders would lose out on the ar-bitrary and systemically destructive ability to charge interest, it would nevertheless be voluntary. For the redundancy of interest would only occur with the preference of the lender to lend without interest in a free market economy as a consequence of the penalty for hoarding.

Indeed economic policy must equally concern itself with protect-ing the interests of the lender as much as the borrower to ensure that lending practices and markets continued to operate freely, rationally and predictably. Yet with a circulation charge it becomes possible to make the exponential growth patterns and the systemic distribution of wealth towards the world’s wealthiest people voluntarily and con-sciously redundant.

Collectively, therefore, it is in our power to decide which system offers the whole of society a higher quality of living and the fulfillment of life, liberty and happiness.

Inflation and the Denial of Death

We have said that in%ation is a kind of wealth destruction and decay of the purchasing power of money over time. It thus acts as the Second Law’s principle of physical death or impermanence on money and the economy as a whole. Nevertheless, in%ation is not a process that is consciously de-

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signed into an economy nor intended by economic policy makers. Rather, it enters the economy as a secondary process due to the systemic ine&cien-cies of monetary policy. In%ation, therefore, can be understood to be more of a disease infecting our economy than intentional design.

We all realize that a human being or culture that is in denial of death does not escape the eventuality of physical impermanence. We all have our time to leave the physical world. Yet whether we embrace the limitations of our bodies and the temporality of our lives or unconsciously deny our eventual fate can literally make all of the di!erence in the world in how we experience life.

Elisabeth Kübler-Ross in her work on death and dying has impacted the lives of hundreds of thousands, if not millions, of people by helping the dying and their families come to acceptance with the pain and sorrow of their condition. She observes that death is not something to fear, but in fact an essential prerequisite to embrace should one want to truly live:

#ere is no joy without hardship. If not for death, would we appreciate life? If not for hate, would we know the ulti-mate goal is love?…At these moments you can either hold on to negativity and look for blame, or you can choose to heal and keep on loving.

You will not grow if you sit in a beautiful %ower garden, but you will grow if you are sick, if you are in pain, if you experience losses, and if you do not put your head in the sand, but take the pain as a gi" to you with a very, very speci$c purpose.

It’s only when we truly know and understand that we have a limited time on earth—and that we have no way of knowing when our time is up, we will then begin to live each day to the fullest, as if it was the only one we had.50

When one has not yet stared death in the face, it is impossible to have understood the precious value of life. Until we have experienced loss and come to painful acceptance of our condition, we cannot say that we have truly lived. When we open up to acceptance of impermanence, the pre-

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ciousness of life reveals itself in full color. Until now, the $eld of economics has been called the Dismal Science

and this nickname is not unwarranted. #e almost exclusive emphasis on objectivity and materiality through the attempt to quantify all of life has le" it blind to some of the most obvious qualitative assumptions and re-alities about the nature and purpose of life itself. #e origin of the word economics of course originates from the Greek oikonomia, which means “management of a household.” But what household does not experience loss, pain and death? #e $eld’s reductive quantitative detachment is com-parable to an ostrich with its head in the sand. #is approach has rendered it separate and apart from the experience of life itself.

What does this have to do with in%ation? In%ation then can be under-stood as a process similar to, or perhaps even an extension of, the denial of death. When economic theory fails to integrate and account for the Second Law and physical impermanence in its theory, then in practice it will fail to properly design and create the most elementary unit of exchange: money. #e Second Law therefore, enters the economy unconsciously as in%ation, which is a consequence of poor design. It then binds us to a future whose value is worth less than today. #is manifests in economic terms as the discounted cash %ow, resource depletion, environmental degradation and an increasing debt and burden on future generations. #is process per-petuates mistrust and instability in worldly a!airs. #e denial of death in economics consequently destroys the experiential quality of life, which is the very process it should serve.

Furthermore, the integration of a circulation charge is the integra-tion of the Second Law and the conscious acceptance of death into our social systems. It enables our economic activity to collectively serve life itself rather than the perpetuation of poverty, inequality and unsustainable growth patterns.

One’s quality of life is markedly di!erent depending upon whether one has embraced the whole of life (including physical mortality) or defending oneself from physical death (and therefore cutting oneself o! from the full-ness of life). Either way, as Keynes said, “in the long run we are all dead,” but only in one of these approaches to life are we fully alive. #is is as true for economic systems as for human beings. For, economic systems are born out of human minds and actions. In this light, we are building a new

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context from which the Dismal Science has the potential to become the Enlightened Science. Economics can and should serve both the function of enabling human wealth creation and the enhancement of the quality of human experience.

Both are vital to the management of a healthy household. The above considerations enable an objective study of the subjectivity of economic processes. The emerging science of subjectivity through epistemology and consciousness studies is an essential context for building wide consensus for the foundations of a global economy, institutions and structures. At its heart is the holistic view of serving the whole of life itself. Anything less than this, any fragment or partial context is bound to find objections, resistance and contention. For many, the service of the wholeness of life may itself prove unpalatable. Yet objections to such an operating principle in human affairs can only merely reveal the ways by which one seeks to arbitrarily oppose and undermine the most essential and ultimately the sole creative force in the universe: life.